Opportunity abounds in Mexcico for steel suppliers

Many U.S.-based steel service centers and processors see Mexico holding opportunities for growth, including several companies that have had operations in Mexico for many years and continue to make moves to increase their presence there.

One big draw is the strength of the automotive industry, said Geoff Gilmore, president of the Columbus, Ohio-based Worthington Steel Co. subsidiary of Worthington Industries Inc.

But there are also other bright spots, according to Carlos Rodriguez-Boras, president and chief operating officer of Chicago-based Feralloy Corp., noting that other promising end-use markets include the energy and construction sectors.

In addition to Worthington and Feralloy, several U.S. service centers and processors have either joint ventures or wholly owned operations in Mexico, including Chicago-based Ryerson Inc. and ONeal Steel Inc., Birmingham, Ala.

Worthingtons first inroad into Mexico came in 2000 with its investment as a joint-venture partner in TWB de Mexico SA de CV, which was formed to provide laser-welded blanks to the Mexican automotive market.

In 2007, Worthington entered into a 50-50 joint venture with Mexicos Serviacero Planos SA de CV to form Serviacero Worthington SA de CV, with service centers in Leon and Queretaro in central Mexico providing slitting, multiblanking and cut-to-length steel processing services to automotive, appliance and electronics customers. The venture has been growing ever since, and recently invested in a greenfield pickling operation in Monterrey, making it the first independent pickler to operate in Mexico, according to Gilmore.

Toll processor Acero Prime SRL de CV, operated for the past 12 years by Feralloy, Mitsui & Co. Steel Ltd. and U.S. Steel Corp., processes about 500,000 tonnes of hot-rolled, cold-rolled and galvanized steel annually for the Mexican automotive industry, Rodriguez-Borjas said. It has three facilities in Mexicos main industrial corridor, and also provides technical services for some customers in Hermosillo.

Phillip M. Wylie, president of Ryersons southwest region, said the metals service center chain operates two facilities in Mexico as well as shipping metal there from some U.S. facilities. We continue to see opportunities to invest in Mexico, he said.

The companys most recent Mexican service center, in Tijuana, is one of the largest in the Baja California region, selling carbon and stainless steel and aluminum bar, tubing, sheet and plate.

ONeals weldment facility in Monterrey has doubled in size since the service center opened the operation more than 10 years ago, helped by strong demand for special bar quality products, said Jeff Simons, vice president of sales and marketing. However, many of the products fabricated there arent for the domestic market, but instead shipped to the United States.

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